CSI: WeHo SFR

Apologies for the hiatus ... apparently the housing market is (ahem) "recovering", if you read the headlines.

8719 Bonner Dr. (90048)
$844,900
3BR / 2BA, 1,228 sq ft
Lot Size: 4300 sq ft

Take advantage of this opportunity. Great Spanish home with spacious & bright living room, with french doors leading to private front patio. Beautiful hardwood floors throughout. Detached guest house with bathroom. Faboulous open kitchen with breakfast nook that leads to private backyard. Very close proximity to restuarants, shopping, etc. Buyer to verify all information and rely on their own findings. Submit all offers with pre-approval, copy of deposit check and POFs.

Sold: 3/96 - $104,000 (yep)

Sold: 3/00 - $602,000

Sold: 7/10/09 - $685,865 (bank buyback)

Reading between the lines (and with sarcasm meter fully turned on), I'm going to make the wild leap that this is a foreclosed property. 'Cause, ya know, we can't just say "REO" or "bank owned" in the listing ... I mean, like, ohmigod, it's a single family house in WeHo. These were all selling for well over a million a couple years ago - it's SUCH A DEAL!!!

OK, sarcasm meter off now. I titled the post "CSI" because of the interesting puzzle of info on this one. I welcome any reader to be Horatio here (or whatever Fishburne's character's name is) and help solve things.

Pieces of info:

1. FACT: Previous buyer (2000 vintage) took out a conventional, 20% down, variable rate

2. DEDUCTION: Based on the interior pictures, they did some recent renovation

3. ASSUMPTION: Owners borrowed against the house for the renovation - and if they're in the keeping-up-with-the-Kadashians LA crowd (and who shouldn't be?), they took the vacations and bought the Range Rovers as well

4. FACT: Taxes go unpaid, and they get a notice of default earlier this year

5. FACT: Bank buys property back and proceeds to list the property a couple hundred grand higher than buy-back amount


Now, I don't expect the bank to look to initially lose money on this, particularly since we've seen some (IMHO uneducated) purchases recently.

Was this a case where the buyer just decided not to pay taxes? It's not like this is a flip, with the last sale 9 years ago. Maybe just someone in over their head?

A relative comp would be 8616 Sherwood, which we profiled in our Walking Dead post, which was a bank-owned SFR of similar size. It sat on a smaller lot, in what I would argue to be a better location. That sold for $810k in June, although psychologically from a buyer's perspective, it was "reduced" by the bank from above $1mm and sat on the market for a while.

I'd argue this has to get to at least the $800k range in the current market. Similar properties - as we've argued on the blog before - will go for the $700k range over the next year or two.

Keep Those Properties Rollin' (Back)

A bit of a yawner for a lazy Sunday, since most of us believe we'll see 2002/2003 (earlier?) pricing when all's said and done, at least on an inflation-adjusted basis, but some data points anyway. Not surprisingly, condos continue to make up the bulk of the rollbacks ...

There were 14 new properties listed in the last two weeks (as of today).

Of those, 6 were 2007 or prior rollbacks, and we're really starting to see some disparity in pricing (vs. prior levels).

SFRs:
1130 N. Wetherly Dr. - $2,795,000
3 + 4.5, 2545 sq ft
Last Sold: 2/06 - $2,940,000
(has played relist game for more than a year)

Condos:
9255 Doheny Rd. #806 - $2,895,000
2 + 2, 1845 sq ft
Last Sold: 1/07 - $3,500,000
(aka the "Matthew Perry" building; relist game for a year +)

874 Hammond #4 - $380,000
1 + 1, 757 sq ft
Last Sold: 3/07 - $420,000
(Short Sale; Also sold in the 2002-2003 time frame for low to mid-$200k)

1250 N. Kings Rd #303 - $489,000
2 + 2, 1134 sq ft
Last Sold: 3/07 - $500,000

740 N. Kings Rd #311 - $269,900
1 + 1, 664 sq ft
Last Sold: 8/08 - $323,000

7505 Hampton Ave #8 - $455,500
2 + 2, 952 sq ft
Last Sold: 1/06 - $470,000

Whither the "Industry Crowd"?

An Anon commented on one of the recent posts:

"A major economic driver for West Hollywood and its environs is the entertainment industry. If the recent LA Times article on the subject is to be believed, the local entertainment industry is under serious pressure from distant (cheaper) competition. Totally aside from the inevitable deflation of the housing bubble there simply will not be the economic support for 1.5 million dollar apartments, nice size or not."

The story is here, for those that didn't see it.

A couple of things:

1) The story focuses on small "support industry" players, not the upper-echelon executives

2) The media has its tried-and-true "death knells" for various industries, and I'm sure the movie/TV production business' death has been called numerous times in the past.

That said, there's no doubt the economic conditions are weighing on all sectors (unless maybe you work at Goldman Sachs).

Again, LA is a big city. I'm not naive enough to think that there aren't people with a LOT of money among the masses.

The question of the day - have the high-paying, high-spending days in "the industry", whose participants I think a condo like this one (large "bachelor pad" style) is targeting, dried up? Peak Manhattan pricing for a condo in LA (OK, so it gets a premium because you can walk to the Roxy and the new Boa)?


9255 Doheny Rd #2203 (90069)
$1,495,000 ($1,132/ft)
1BR / 1.5BA
1,321 sq ft

Rare offering in the highly coveted Sierra Towers, one of LA's best full-service bldgs. Ideal 22nd-floor location, w/large deck to take in the stunning views. Updated chef's kitchen, dining area, and spacious LR, all adorned w/beautiful hardwood flrs. Oversized master suite w/abundantly spacious closet helps this stunning unit shine. Hand the keys to the valet & stroll over to the Sunset Strip. Top of the line building includes pool, newly updated gym, concierge & 24-hour security & valet.

Sold: 4/02 - $512,500

Sold: 9/03 - $700,000

Listed: 5/8/09 - $1,850,000

Reduced: 5/21/09

More "Rarities" = More Pain?

Last month, I posted an entry about a fairly nondescript condo unit on Flores where the listing description called it a "rare opportunity". This despite the fact that the short sale price was barely below the inflated 2005 price.

I've been seeing a lot of "rare" being used in listing descriptions recently, and have to wonder, as we see with the example below, isn't "rare" or "rarely on market" just code for "the recent buyer is now in over his/her head"? As we've discussed, this will be a long cycle, so the idea of "rare" properties will probably be a commodity.


9024 Cynthia Street #304
$1,449,000
2BR / 2.5BA
2,331 sq ft

LUXURY LIVING IN THE HEART OF WEHO. 1992 BUILT TO LOOK LIKE "OLD HOLLYWOOD" BY ARCHITECT ROBERT EARL, "VILLA CYNTHIA" IS ONE OF THE MOST DESIRABLE BLDGS IN WEHO. HIGH CLNGS, ENORMOUS CLOSETS, & RMS & ROOF DECK ARE SOME AMENITIES IN THIS BEAUTIFUL, ONE OF A KIND PROPERTY. THIS PH IS THE MOST PVT & BRIGHTEST IN BLDG. 2 BDS & DEN OFF KITCH. HUGE ROOF DECK OVERLOOKING TREES & HOLLYWOOD HILLS. 2300+ SQFT W/2 SXS PRKG, EXTRA STORAGE & SEC. A RARE OFFERING, THESE PHS RARELY GO ON THE MARKET.

These look like really nice units - anyone seen them? Of course, "rarely go on the market" is on overstatement, seeing how, from the sales history, this unit's been turned over 4 times in 12 years. But, I'll give them a pass since there was a 7 year gap (and the requisite 2.5x increase in "value") since the prior sale. But, with that near-peak 2006 last sale, there's probably a reason this one's on the market. Will be shocked if this sells above the 2006 pricing.

Sold: 4/99 - $580,000

Sold: 4/06 - $1,300,000

"Green With Envy" - Update - SOLD

We profiled 825 N. Kings Rd #4 in our "Green With Envy?" post back in March.

This was a fairly cool, innovative building that looked like it might have a shadow inventory situation. The building was marketed and most units sold in late 2007.

When we profiled #4 in March, its last/initial sale was in August 2007 for $797,000. It had been listed for 5 months with a couple of reductions, the most recent to $695,000.

Now we have a sale and a comp for the rest of the building:

Sold: 6/10/09 - $682,500 (-14%)

As our readers know, we have been seeing 2005 condo rollbacks, so this is not a surprise, although it is a new building with all sales (at higher levels) very recently. A tough comp for anyone else in the building feeling distress, although we're going lower still ...

Coincidentally, Harry Potter Opens Next Week

910 N. Orlando Ave (90069)
$2,495,000
3BR / 3BA
2,313 sq ft
13,100 sq ft lot

ON THE BEST STREET IN W. HOLLYWOOD W/ HUGE DEEP LOT, CHARMING DECORATOR'S COTTAGE W/ 3 BD AND 3 BA. 30FT LIVING RM W/ FP, MASTER W/ WALK IN CLOSET AND FP, LIBRARY W/ FP, DINING RM W/ LEATHER SQURE FLOORS AND UPDATED KITCHEN. 1 BDRM GUESTHOUSE W/ 30FT LIVINGROOM W/ FP AND ITS OWN GAZEBO. POOL, KOI POND W/ WATERFALL, OUTDOOR FP, INDIAN PAVILION FOR OUTDOOR CONTEMPLATION OF THE LOVELY GARDEN. DOMED ENTRY W/ MURAL. ENGLISH ROSE GARDEN, BOXWOOD HEDGES & GRAVEL WALKS, FEELS LIKE SOUTH OF FRANCE.

Don't have much to say about this, just a fun post for the end of the holiday weekend.

Without seeing pictures, this is a large SFR in a great WeHo location on a huge lot. Aside from the SHOUTING IN ALL CAPS in the listing, not much dispute there.



After seeing more pictures, I can only assume by "feels like South of France", they meant to add "as set in a fantasy novel."

And I remember worrying about buying a townhouse with 3 levels (2 sets of stairs) in that I was limiting my audience to a younger, more mobile crowd.

Why $700k Is Still Too High (IMHO)

Lots of good comments on the prior post about the 955 N. Vista sale. As a blogger, it's always interesting to see what really gets people's interest, so the blog can be more closely aligned with them.

Since the magical question is, "Where will things ultimately settle?", your humble blogger will make an attempt to put forth his position. As always, I welcome criticism, debate, and thrown tomatoes ...

Here's a point-by-point analysis of why $700k for a small SFR that needs work, in an OK but certainly not the nicest, area of WeHo, is still too high.

1. Requires $140k down.

In our fantasy world of celebreality and everyone on the streets of the Westside seemingly driving Range Rovers, $140k may seem like peanuts. But, especially given the general market downturn over the past year, it's even a larger sum. And yes, I know that some people may be "on the sidelines" and might have stayed out of the markets, but are they really going to plunk down their $140k for a property like this?

2. The Income Issue.

Some people like to use the "3x income" rule of thumb when discussing property afffordablity. I tend to be a little more flexible and look at a 30% DTI ratio. Using the average of those two calculations for a $700k property brings you to an income of $200k to support the purchase. Again, I know in our little Westside world there are "a lot" of people making $200k+. But, that's still a significant income, which puts you in the top 5% of households. OK, you say, but on the Westside that only puts you in the top [insert a number that may be closer to 20%]. Might be true - I still tend to think a lot of incomes are overstated - but does this property even scream "top 20%"?

3. The Condo Alternative

One commenter mentioned this. The drop in condo pricing is seeming to accelerate. A fair amount of new construction hitting the market, which, unless we have an extremely strong economic rebound in the next 12 months, will need to drop prices further. For this size of property, I think couples/small families will have a lot of options in the condo market. And yes, I know that HOA dues aren't deductible, but neither is the expense to have someone mow your (albeit tiny) lawn.

4. The Inflation Issue

I'm no economist, but am a believer in reversion to the mean. With mortgage rates around 5.5% currently for conforming loans (assuming excellent credit and 20% down), the pre-tax monthly on $700k (including taxes) is $3900. If rates move up a percent, which would still be low historically, the purchase price would need to adjust to $640,000 for the same monthly payment. If you believe in greater inflation, adjust accordingly.

With all that said, I'm not sure the buyer on the Vista property got a terrible deal. Depending on how much work the house still needs, your after-tax monthly nut is probably somewhere around $3500. I think you can rent for less in this market, but if you like a property, it's not the worst time to be looking ... as long as you plan to be there for at least the next 7-10 years.

"At What Price Reality?" - Update #2

Catching up on some previously-posted SFR sales.

We featured 955 Vista in our "At What Price Reality?" post back in February.

As a reminder, this is a 3BR + 2.5BA, 1558 sq ft "cosmetic fixer" that had "been rearranged" (?) and "needs TLC".

The property had been sold in Dec 2005 for $827,500 and then a price of $1,200,000 was recorded in November 2006, although that could have been a cash-out refi.

It was first listed in August of last year at $815,900 and reduced to $759,900 in January.

SOLD: 6/22/09 - $700,000